In re Synchronoss Securities Litigation (705 F. Supp. 2d 367, 2010)

United States District Court for the District of New Jersey 2010-04-07

Citations

Full opinion text

OPINION

GARRETT E. BROWN, JR., Chief Judge:

TABLE OF CONTENTS

I. Introduction...............................................................373

II. Background...............................................................373

III. Parties’ Contentions........................................................376

A. Dismissal Motion.......................................................376

1. Plaintiffs’Position..................................................376

a. Overall Factual Assertions.......................................376

b. Four Lines of Plaintiffs’ Allegations...............................377

i. Allegations Related to the iPhone 3G..........................379

ii. Allegations Related to “Unlocking”............................382

e. Plaintiffs’ Additional Contentions and Legal Claims .................386

2. Defendants’ Position................................................386

B. Strike Motion..........................................................388

IV. Discussion.................................................................389

A. Strike Motion..........................................................389

1. Evidentiary Aspects ................................................389

2. Procedural Aspects.................................................391

B. Dismissal Motion.......................................................393

1. Pleading Requirements..............................................393

a. Rule 8 Pleadings................................................393

b. Pleading Under Rule 9 and the Reform Act........................395

2. Substantive Law....................................................396

a. Element Pled Pursuant to Rule 8: Materiality......................397

b. Elements Pled Pursuant to Rule 9 ................................397

i. Reliance...................................................398

ii. Scienter...................................................398

iii. Forward-looking Statements.................................401

iv. Omissions .................................................403

c. Liability of Controlling Person....................................404

3. Claims Based on Defendants’ Forward-Looking Statements..............404

a. Future Projections Allegedly Related to the iPhone 3G..............405

b. Future Projections Allegedly Related to “Unlocking”................407

i. “False Failure to Project” as a Cause of Action.................407

ii. Insufficiency of Pleadings....................................408

iii. Substantive Insufficiency of the Claim.........................409

4. Claims Based on Defendants’ Alleged Omissions........................414

a. Lack of Duty to Disclose Ensuing from Waldis and Irving’s Trades ......................................................416

b. Allegations as to Omissions and/or Duty to Correct or Update........416

i. Omissions as to the iPhone 3G................................417

ii. Omissions as to the Change in Synchronoss’ Revenue............421

C. Leave to Amend .......................................................423

V. Conclusion................................................................424

1. INTRODUCTION

This matter is before the Court upon Defendants’ motion (“Dismissal Motion”), see Docket Entry No. 24, seeking dismissal of Plaintiffs’ Consolidated Class Action Complaint (“Complaint”). See Docket Entry No. 22. Plaintiffs filed their opposition to the Dismissal Motion (“Dismissal Opposition”), see Docket Entry No. 25, to which Defendants filed a reply (“Dismissal Reply”). See Docket Entry No. 30. The foregoing submissions appear to be intertwined with Plaintiffs’ later filed motion (“Strike Motion”) requesting the Court to strike certain Defendants’ arguments raised in the Dismissal Motion. See Docket Entry No. 27. Defendants filed their opposition to the Strike Motion (“Strike Opposition”), see Docket Entry No. 31, to which Plaintiffs filed a reply (“Strike Reply”). See Docket Entry No. 32.

For the reasons detailed below, Plaintiffs’ Strike Motion will be denied, without prejudice, as premature. Defendants’ Dismissal Motion will be granted on grounds unrelated to Plaintiffs’ Strike Motion, and the Consolidated Class Action Complaint will be dismissed. Such dismissal, however, will be without prejudice, and Plaintiffs will be granted leave to cure the deficiencies of their pleadings.

II. BACKGROUND

Plaintiffs brought this action on behalf of a putative class consisting of all persons and entities that purchased or otherwise acquired securities (seemingly, common shares only) issued by Synchronoss during a slightly more than four month period, from February 4, 2008 to June 9, 2008, both dates inclusive (“Class Period”). See Compl. ¶ 2.

According to the Complaint, Defendant “Synchronoss [Technologies] is a Delaware corporation[,] with principal executive offices located at ... Bridgewater, New Jersey[] .... As of August 27, 2008, [Synchronoss] had approximately 31.4 million shares outstanding that traded on the NASDAQ under the symbol ‘SNCR.’” Compl. ¶ 12. While the technical endeavors in which Synchronoss is involved are complex and multiple, it can be said that Synchronoss is, generally, in the business of creating and licensing software used by other business entities, which are involved in providing wireless services; one of the functions that Synchronoss’ software can perform is activation of wireless devices from remote locations, e.g., remote (meaning, online/off-site) activation of iPhones (mobile/cell phones produced by Apple Inc. (“Apple”)). See id. ¶¶ 26-27.

Apple is a corporation that designs and manufactures consumer electronics and computer software; Apple’s most well-known hardware products include Macintosh computers, the iPod, the iPhone, etc. Steven “Steve” Paul Jobs is the co-founder and chief executive officer of Apple.

The history of the iPhone began with a conclusion reached by Steve Jobs in 2003 that the high-tech future belonged to mobile phones that could also operate as devices enabling access to portable information. By that time, Jobs had Apple put its energies into the iPod, a portable media player, and the corresponding iTunes software, a digital media player application used for purchasing and downloading digital music and video files. In September 2006, Apple released a new version of iTunes that included references to a then-yet-unknown mobile phone which was announced four months later as the “iPhone”; the iPhone was actually introduced into the market on June 29, 2007.

The iPhone is an excellent example of what is commonly known as a “smart-phone,” meaning that it is a mobile telephone offering computer-like capabilities, ie., it is an advanced cell phone (allowing such features as text messaging, visual voicemail, audio conferencing, call holding, call merging, caller ID, etc.) that also functions as a camera and a portable media player equivalent to a video iPod, allows the user a Wi-Fi connection with complete access to the Internet (including email, full web browsing, etc.) and, in addition, performs many other functions.

When the original version of iPhone was introduced to the purchasing public in 2007, TIME Magazine named it the Invention of the Year. The second generation of the iPhone, popularly known as the “iPhone 3G,” is an even more advanced device capable of receiving and processing data faster' than the original iPhone; it also performs additional and more complex functions than the original iPhone and, in addition, ensures that the user — even if (s)he is located in an area suffering from a poor cell phone connection — could nonetheless access the transmission frequency securing due reception.

Apple tightly controls most aspects of the iPhone; for instance, the iPhone’s operating system is designed to only run software that has an Apple-approved “cryptographic signature,” ie., the code protecting against alterations or corruptions.

All iPhones must — theoretically—be “activated,” meaning that they have to be assigned a telephone1 number and carrier before the user could obtain assess to iPhone features. For the purposes of the United States market, all iPhones are “locked,” in the sense that the creators of the iPhone tried (and keep aggressively trying) to ensure that the iPhone could be used only with one particular authorized carrier, namely, AT & T, which is Apple’s partner network.

However, various “hackers,” who are unwilling to switch from their carriers to AT & T either out of customer loyalty or because they are planning to use different service providers when traveling to Europe/ Asia (in order to avoid the roaming fees charged by AT & T on overseas calls), or because they simply dislike AT & T’s subscription terms or AT & T as a business entity, found methods to “unlock”— meaning, to “activate” — their iPhones in order to use them with unauthorized carriers (that is, carriers other than the AT & T) after such “unlocking.” In sum, it can be said that “unlocking” is the process by which a cell phone (or any mobile device) is made compatible with telephone networks) it was not specifically licensed to be used with.

Many owners of smartphones (including the owners of iPhones) are, however, not concerned with the issue — or not concerned with only the issue — of changing their service providers: rather, they want to gain control over the applications/software they can install on their mobile devices. Presumably, the reason is that many smartphone manufacturers “lock” the devices so that only their approved applications can be installed. Apple is no exception to that practice, and the iPhone can only install applications purchased from Apple’s App Store (since the iPhone’s operating system is designed to run only the software that has an Apple-approved cryptographic signature); therefore, if there is an application an owner of the iPhone wants to install that is not officially approved and offered by Apple, (s)he out of luck. However, similar to the “unlocking” restriction (relevant for the purposes of phone “activation”), this installment-of-software restriction could be overcome by “jailbreaking” the phone, that is, by replacing the iPhone’s firmware with a slightly modified version that does not enforce the signature check.

While the goals and technical aspects of “unlocking” and “jailbreaking” are qualitatively different, the financial implications of these processes are somewhat similar for the purposes of both Apple and AT & T. In the case of “unlocking,” AT & T is prevented from collecting fees associated with its acting as a carrier of cell phone accounts of the iPhone owners, while in the case of “jailbreaking” — Apple is prevented from collecting the fees associated with the iPhone owners’ installment and/or usage of Apple’s App Store software applications. Consequently, beginning in September 2007, Apple has been releasing various technical updates and new firmware aimed at either relocking the “unloeked/jailbroken” iPhones or to “bricking” such devices (ie., rendering these “hacked” devices inoperable). .

It appears that Synchronoss was the entity which created the program allowing Apple/AT & T to offer their customers an opportunity to self-activate their new iPhones. In other words, in contrast with the traditional model necessarily requiring a customer to go through the process of in-store purchase-and-activation of his/her new iPhone, Synchronoss’ program (adopted by Apple/AT & T) allowed the customer to choose between: (1) the in-store purchase-and-activation; and (2) an opportunity to (a) purchase an iPhone (either in-store or online); and then (b) self-activate this new iPhone from the comfort of the customer’s own home via iTunes. Since the self-activation option permitted iPhone purchasers to physically take their yet-to-be-activated iPhones outside AT & T’ stores, such option also provided these purchasers with a “window-of-opportunity” during which they could “hack” their new iPhones by “unlocking” their new devices. In light of the obvious financial losses caused by the practice of “unlocking” original iPhones, Apple/AT & T — starting from release of Apple’s iPhone EG — decided to part with the customer-convenient-but-profit-endangering model of self-activation and elected to permit only the old-but-financially-more-seeure model of in-store purchase-and-activation. Consequently, Synchronoss’ off-site/online self-activation program became of no use for the purposes of the iPhone 3G, causing the stream of compensation Synchronoss was receiving from Apple/AT & T for the use of its program to progressively dry up, since Synchronoss’ program kept being used only for the purposes of off-site activations of the original iPhones that were (re-)entering the market.

III. PARTIES’ CONTENTIONS

A. Dismissal Motion

1. Plaintiffs’ Position

a. Overall Factual Assertions

For reasons not entirely clear, and— seemingly — without any correspondence to the remainder of Plaintiffs’ allegations, the Complaint opens with Plaintiffs’ contention that “Synchronoss’ [self-activation program was designed] to prevent Apple iPhones from being activated with wireless phone carriers other than AT & T,” Compl. ¶ 2 (emphasis supplied), even though it appears that the Synchronoss’ program was not designed to be a “lock” (or an anti-“hacking” device) of any kind and, indeed' — for the purposes of phone activation — such “lock” was already imbedded in the iPhone by Apple itself, via its firmware intertwined with its GSM system (using the SIM cards tied to each iPhone’s serial number). Accord Compl. ¶ 28 (“Synchronoss provided the software allowing U.S. purchasers of the iPhone to activate that device from their home computers for use on AT & T’s network”). Thus, while — as detailed infra — ’the Court is obligated to take all Plaintiffs’ factual allegations as true for the purposes of Defendants’ Dismissal Motion, the Court presumes that this particular piece of information (ie., the allegation seemingly suggesting that Synchronoss was hired, but failed, to protect the iPhone from “unlocking” or other forms of hacking) was included by Plaintiffs in the Complaint as a result of inadvertence.

The remainder of Plaintiffs allegations do not appear inherently self-contradicting.

According to the Complaint, Synchronoss, in its report addressing the second quarter of 2007, “[ajnnounced a multi-year contract with AT & T to support the launch and ongoing operational support of the Apple iPhone.” Id. ¶ 33. The utilization of ConvergenceNow by AT & T “allowed Synchronoss to profit every time an Apple iPhone was activated on the AT & T network.” Id. ¶¶2, 29. In 2007, Synchronoss’ gross receipts from off-site iPhone activations via ConvergenceNow amounted to 32.38% of Synchronoss’ gross revenue. Id. ¶¶ 2, 31, 44 and 50. By the beginning of the Class Period, “Synchronoss continued to maintain that the iPhone was producing and would produce tremendous results for [Synchronoss,] and [Synchronoss’] financial condition was strong,” Id. ¶ 4.

The Complaint further alleged that, because: (a) “[a]t the time the iPhone was released, it was unlike any other phone on the market[; and (b) ] most consumer wireless contracts [were, as they typically] are[,] two years in length ..., [some investors, Plaintiffs included, as well as some] technical journalists and [some] financial analysts[ somehow] believed that the number of iPhone sales would increase in coming years,” and Synchronoss’ income from off-site activations [of iPhones] would show an “astronomical growth.” Id. ¶¶ 32, 38. The aforesaid beliefs of these “journalists, financial analysts and investors” were, apparently, fueled in 2008 by the exact-content-unspecified rumors of unspecified origin, the gist of which was that the iPhone 3G would soon be released and, also, available for off-site self-activation, and, in addition, that Synchronoss would, also, handle these off-site activations of iPhones 3G. Plaintiffs maintain that this rumor-based three-step deducement had to be warranted because: (a) Synchronoss had widely publicized its 2007 “multi-year contract with AT & T to support the launch and ongoing operational support of the Apple iPhone,” id. ¶ 2, 29, 33; and (b) Synchronoss was not discussing/projecting/publicizing the possibility that it might be excluded from off-site activations of future models of the iPhone, or that these future models of the iPhone (the iPhone 3G inclusive) could be, altogether, not offered by Apple/AT & T for off-site activation. See id. ¶¶ 32-34; Dismissal Opp., at 5-6 (asserting that Plaintiffs’ deduction as to Synchronoss’ upcoming off-site activation of the iPhone 3G was necessarily logical simply because “Defendants said nothing to the contrary”).

b. Four Lines of Plaintiffs’ Allegations

Plaintiffs assert that, on May 6, 2008, ... [Synchronoss] announced that it had ‘materially lowered’ its [financial projections] for [the remainder of] 2008 due[,] in large part[,] “to declining revenue associated with Apple’s iPhone.” Compl. ¶ 4. From this statement on, the Complaint, as well as the Dismissal Opposition, seems to run on the following four, rather distinct, tracks of allegations, although these allegations are at first heavily interwoven, if not plainly conflated, but then presented in a somewhat patchy fashion.

Specifically:

(a) some assertions seem to suggest that Defendants unduly concealed the known-to-them truth about the financial effect the practice of “unlocking” was taking on Synchronoss’ revenue;

(b) another line of allegations, also related to the practice of “unlocking,” does not address the issue of what Defendants omitted to disclose about the then-existing financial situation of Synchronoss; rather this line of allegations seems to imply that Defendants wrongly forecasted (or did not correct their prior forecast as to) Synchronoss’ future revenue by not factoring in the potential negative impact which the practice of “unlocking” might take on Synchronoss’ revenue in the months to come;

(c) the third line of assertions has nothing to do with the practice of “unlocking.” Rather, these allegations seem to imply that Defendants’ statements about Synchronoss’ “multi-year” contract and, perhaps, the overall optimistic tone of Defendants’ future projections, somehow misled the investors into believing that: (i) the iPhone 3G would necessarily be available for off-site/online activation; (ii) Synchronoss would necessarily be involved in such online self-activation and would, thus, derive revenue on a per-activation basis, as was the case with the original iPhone; and (iii) because the iPhone 3G would be a more advanced device in comparison with the original iPhone, it would necessarily be even more popular than the original iPhone, and that would necessarily result in Synchronoss’ receipt of even more lucrative profit from off-site activation of the iPhone 3G. See generally, Compl.; and

(d) the final line of allegations seems to suggest that, even prior to June 9, 2008, Defendants knew, for a fact, that Apple/AT & T decided not to involve Synchronoss in the process of activating iPhones 3G, but Defendants omitted to disclose this fact to the investors.

In addition to these four lines of allegations, Plaintiffs state a line of derivative claims against Waldis and Irving. See note 29, infra.

i. Allegations Related to the iPhone 3G

Plaintiffs assert that when, on May 6, 2008, Synchronoss “announced that it had ‘materially lowered’ its [financial projections] for [the remainder of] 2008 due[,] in large part[,] to declining revenue associated with Apple’s iPhone,” Synchronoss failed to disclose the allegedly already-known-to-Defendants fact that Synchronoss’ services would not be utilized for the purposes of the iPhone 3G. Id. ¶¶ 5-6.

The information that Synchronoss’ services would not be utilized with regard to the iPhone 3G was publicized by AT & T on June 9, 2008. Id. According to the Complaint, on the next day, that is, on “June 10, 2008, [Synchronoss] confirmed [AT & T’s] announcement and admitted that [its non-retention by Apple/AT & T for the purposes of the iPhone 3G] was a reason” for Synchronoss’ release of lower financial projections on May 6, 2008. Id. ¶ 6 (emphasis supplied). Although the Complaint does not inform the Court about the actual “admission” language by Defendants, Plaintiffs seem to deduce the fact of such admission from the language of Synchronoss’ 8-K Report filed with the SEC June 10, 2008. That Report read, in relevant part, as follows:

on June 9, 2008, AT & T announced the expansion of its relationship with Apple relative to the much anticipated launch of the 3G Apple iPhone. Synchronoss will continue [its] relationship with AT & T as it relates to the activation and provisioning of Apple iPhones. However, Synchronoss will not participate in the on-site, retail store activations associated with the 8G iPhone, which was already taken into consideration when we provided our revised financial outlook on our first quarter 2008 financial results conference call.

Compl. ¶ 51 (emphasis supplied by Plaintiffs).

Plaintiffs seek to explain their allegations as follows: “By admitting that the revision downward of [Synchronoss’] full year 2008 [projections] was partially due to the fact that [Synchronoss] would not be involved with the activation of the 3G iPhone, Defendants also admitted that their [projections,] issued on February 4, 2008, [were] based upon the presumption that [Synchronoss] would be involved with the 3G, which they already knew was not going to occur.” Compl. ¶ 52. However, this purported clarification offers more problems than solutions. First, it is not clear as to how one can possibly base his/her projection on a presumption (s)he has not actually presumed. At best, one could surmise that Plaintiffs seek to assert that: (a) Defendants knew that their services would not be utilized in activations of the iPhone 3G; but (b) Defendants’ 2008 projections, nonetheless, factored in the receipts from off-site activations of the iPhone 3G.

However, this odd turn of phrase presents a minor concern. A far more substantial problem with Plaintiffs’ deduction is that the 8-K Report quoted by Plaintiffs merely stated that “Synchronoss will not participate in the on-site, retail store activations associated with the 3G iPhone.” Id. ¶ 51 (emphasis supplied). That statement is qualitatively different from Plaintiffs’ leap of logic reading it as Synchronoss’ admission of long-time knowledge that Synchronoss would not be involved in any activation (including off-site, online activation) of the iPhone 3G. Contrary to Plaintiffs’ deduction, it seemed quite logical for Synchronoss to factor in its non-involvement in on-site, retail store activar tions: indeed, Synchronoss’ ConvergenceNow program was never designed for such use; rather, it was expressly created only for off-site/online activation.

In light of the foregoing, Plaintiffs’ assertions (ie., (a) that Defendants’ 8-K Report of June 10, 2008, contained an “admission” that Defendants knew the iPhone 3G would not be available for off-site self-activation and, thus, would not utilize ConvergenceNow; and (b) that Synchronoss’ publication of its multi-year contract with AT & T was effectively equal to an announcement that Synchronoss would service off-site activation of either all future models of the iPhone or, at the very least, of the iPhone 3G) appear to state not a fact but a factless self-serving conclusion.

Another set of allegations, seemingly related to the iPhone 3 G, consists of the following four assertions:

a. [Synchronoss] invested a large amount of time [ie., months] and work ... preparing [its umbrella version of ConvergenceNow for the specific use with the original iPhone]. Compl. ¶ 28.

b. A former Manager of Information Technology at Synchronoss in Bethlehem, PA [employed by Synchronoss] until March 2008, who was personally involved with the task of purchasing over a million dollars worth of equipment for the development and launch of the 2G phone, [] stated that it would be a matter of months versus weeks for Synchronoss to gear up for the launch of the 3G iPhone. Moreover, he stated that the Company laid off their most senior technical staff, including the Senior Windows Engineer and the Senior Network Engineer who would have been essential to working on the 3G iPhone in the months before it was launched. The Company’s laying off of its senior technical staff essential that would have been essential [sic] to the 3G iPhone is a strong indication that Defendants knew at that time that Synchronoss would play no role in activating the 3G iPhone. Id. ¶ 47 (emphasis supplied).

c. A former Synchronoss Agent Supervisor in Bethlehem, PA from July 2007 through March 2008 stated that the Company terminated many people in February 2008. Id. ¶ 48.

d. According to a former Synchronoss software engineer employed by the Company until February 2008, the layoffs in February 2008 were of permanent employees. Id.

These four assertions seem to suggest, jointly, the following two sentiments: (1) since it took Synchronoss months to alter its umbrella version of ConvergenceNow for off-site activation of the original iPhone, it necessarily had to take Synchronoss at least a comparably lengthy period of time to re-alter its tailored-to-the-original-iPhone version of ConvergenceNow for off-site activation of the iPhone 3G; and (2) such re-alteration had to also be so technically complex that layoffs of certain permanently employed managers and senior engineers, and some other permanent staff, would automatically render the task of such re-alteration virtually insurmountable.

The problem with these assertions is two-fold. First, to a person lacking expertise in high-tech matters, as is the case with this Court, the argument appears plainly conclusory. Indeed, while the iPhone 3G is a more advanced technical device in comparison with the original iPhone, that fact, in and by itself, does not necessarily indicate that the computer program activating this advanced device electronically must be qualitatively different from the computer program activating the original iPhone and/or that the process of modification of the original computer program would be as complex as the process of creating that original program from scratch. Second, even if the Court were to hypothesize that an expert computer programmer could verify Plaintiffs’ conclusions sufficiently to meet the requirements of the Federal Rules of Evidence, this presumption cannot cure the deficiencies of Plaintiffs’ pleadings since the above-quoted assertions — being merely pled by Plaintiffs in the Complaint — still cannot be qualified as facts: at best, they could be qualified as an inadmissible non-expert opinion. Consequently, the only pled fact the Court could gather from the four above-quoted assertions is that, in February of 2008, Synchronoss laid off an unspecified number of employees, some of which had senior positions and some of which were permanent staff,

ii. Allegations Related to “Unlocking”

As noted supra, Plaintiffs’ Complaint suggests two lines of allegations related to “unlocking,” namely: (1) allegations seemingly indicating Plaintiffs’ position that Defendants concealed the known-to-them truth about the effect “unlocking” was taking on Synchronoss’ revenue; and (2) assertions that Defendants issued false financial projections by not factoring in the possible negative effect the practice of “unlocking” was capable of causing to Synchronoss’ future revenue.

Six events are described in the Complaint with respect to these “unlocking”based challenges. They are:

1. On February 4, 2008, Synehronoss held its fourth-quarter-of-2007 earnings call. See Compl. ¶ 56. Both Defendants Waldis and Irving made certain statements during the call. See id. Specifically:

a. Waldis stated: “We are extremely pleased with the continued high level performance that our Convergence-Now [program] has delivered [for the purposes of] activation of the Apple iPhone.” Id. Plaintiffs read this statement as an utterance intentionally disguising the effect the practice of “unlocking” had been causing — or could cause — to Synehronoss’ then-accrued and/or future revenue. See Dismissal Opp., at 7.

b. Irving forecasted Synehronoss first-quarter-of-2008 revenue at $30 to 32 million, and full revenue for the year 2008 at $151 to $160 million. See Compl. ¶ 58. Plaintiffs assert that these figures were provided by Defendants regardless of Defendants’ knowledge that these projections would be unattainable because of the negative impact the practice of “unlocking” might have been destined to cause to Synehronoss’ revenue. See Dismissal Opp., at 7-8.

2. On the same day, that is, on February 4, 2008, Synchronoss also issued a press release in which, according to the Complaint: (a) “Irving stated that ‘we are more optimistic about [Synchronoss’] long-term future than at any point in our history’ while (b) “Waldis [stated] that ‘Synchronoss is well positioned to benefit from multiple growth opportunities’ and [that he] was ‘optimistic about [Synchronoss’] ability to take advantage of those opportunities based on Synchronoss’ unique ConvergenceNow.’ ” Compl. ¶ 55. Plaintiffs read both of these statements as Defendants’ assertions that “unlocking” was not affecting — and would not affect — Synchronoss’ accrued and future revenue. See Dismissal Opp., at 8.

3. “On February 29, 2008, [Synchronoss] filed its [10-K] Report ... with the SEC. [See Compl.] ¶ 59. The [Report], which was released two-thirds of the way through the first quarter of 2008, did not discuss the materially adverse effect” of unlocking (as to the accrued part of the first quarter of 2008), and did not offer new quarterly or yearly revenue projections factoring in the potential negative impact of “unlocking.” See Dismissal Opp., at 8.

4. “On May 6, 2008, Synchronoss issued a press release ... reporting its results for the first quarter [of] 2008. In that press release, [Synchronoss] announced that it had materially lowered its growth expectations in 2008 due to reduced revenues associated with the iPhone. [In addition, Synchronoss] reported net revenue of $29.1 million for the first quarter of 2008, missing its projection of $30[ ] million [by $0.9 million, that is, by 3%].” Compl. ¶ 63. Synchronoss also revised its projections for the entire 2008, lowering them from $151-$160 million to $115-120 million. Id. ¶ 63. Plaintiffs read this press release as Defendants’ statement verifying that Defendants knew that the practice of “unlocking” was negatively affecting Synchronoss’ revenue long before May 6, 2008. See Dismissal Opp., at 8-9.

5. On the same day, that is, on May 6, 2009, Defendants had another earnings call. During that call, Waldis, in response to an analyst’s question “[A]re you basing your expectations for the year on a run-rate basis from where you are right now or with further degradation of activation rates from where you are now given the trending?” stated:

Well, we certainly think of — as I said earlier, we definitely see ourselves at an at least 10 million annual run-rate exiting the year as it relates to the iPhone.... Obviously, getting the surprise in January and February, we looked at it and wanted to make sure that as far as forecasting going forward, that we accounted for it, maybe conservatively. If it ends up being better, that would be great. But ... we’ll at least end with a $10 million run-rate at the end of the year. Compl. ¶ 66 (emphasis supplied by Plaintiffs); Dismissal Mot., Ex. 9. Same as with regard to Defendants’ May 6, 2009, press release, Plaintiffs read Waldis’ phrase “getting the surprise in January and February” as an indication that Defendants knew about the effect the practice of “unlocking” was taking on Synehronoss’ revenue in January and February of 2008, and deduce from the foregoing that Defendants’ projections stated during February 4, 2008 earnings call (and repeated in Synehronoss’ February 4, 2008, press release), as well as Defendants’ figures provided in the February 29, 2008, Report, were false due to Defendants’ failure to take into account the negative effect of “unlocking.” See Dismissal Opp., at 9.

6. Finally, Plaintiffs also make a reference to Synehronoss’ press release of October 25, 2007. Plaintiffs point out that, during the above-discussed May 6, 2008, earnings call, Irving, in response to an analyst’s question, “Can you confirm that you will continue processing iPhone transactions later in this year and that the guide down is strictly related to the number of phones being unlocked and the reduced pricing arrangement around that?” responded with, “I think the best way to answer that ... is that I’ve tried to provide as much information as I could without violating any [non-disclosure agreements (“NDAs”) ] that [Synehronoss has] with [Apple and/or AT & T].” Compl. ¶ 67. Plaintiffs, however, note that Synehronoss’ press release of October 25, 2007, did state the cumulative number of iPhones activated by that date via Convergence-Now (which, Plaintiffs guess, might have been a violation of the very same NDAs to which Irving referred on May 6, 2008). See id. ¶ 37. Consequently, Plaintiffs compare Synehronoss’ October 25, 2007, disclosure of the cumulative number of activated iPhones with the statement made by Irving during the May 6, 2008, earnings call and conclude as follows:

[A]fter the third quarter 2007 earnings announcement, Synehronoss changed its practice and stopped disclosing to investors how many iPhones it had activated in any period notwithstanding its prior practice of doing so. Indeed, despite the importance of the iPhone contract as a whole, Synchronoss did not separately disclose its revenue from that or any other contract. Rather, citing non-disclosure agreements with its customers, Synehronoss informed investors only of its total revenue from operations for each quarter. Therefore, at no point during the Class Period were investors able to determine for themselves the number of iPhones that were being activated versus those that were being unlocked. []

Compl. ¶ 43; accord Dismissal Opp., at 7.

c. Plaintiffs’ Additional Contentions and Legal Claims

Plaintiffs also assert that

[Waldis and Irving] were ... motivated to engage in the fraudulent scheme in order ... to sell their personally held Synchronoss common stock ... at artificially inflated prices while they [knew that the practice of “unlocking” was taking a toll on Synchronoss’ revenue]. The following chart sets forth the [stock sales] by [Waldis and Irving] during the [C]lass [P]eriod:

[Waldis:] [Irving:]

[May 2008 — ] 6,000 [shares] ... 3,080 [shares]

[April 2008 — ] 54,000 [shares] ... 6,160 [shares]

[March 2008 — ] 12,000 [shares] ... 3,080 [shares]

[February 2008 — ] 12,000 [shares] ... 1,100 [shares]

Total: 84,300 [shares] ... 13,420 [shares]

Compl. ¶ 83.

Basing their legal claim» on these figures (and, obviously, on all other allegations discussed supra), Plaintiffs claim that Defendants’ actions amounted to violations of Section 10(b) of the Exchange Act and of Rule 10b-5. See id. ¶¶ 98-109. Plaintiffs also claim that, in light of the foregoing, Waldis and Irving — being top executive officers and, thus, in control of Synchronoss — violated Section 20(a) of the Exchange Act. See id. ¶¶ 110-13.

Finally, Plaintiffs maintain as follows:

The statutory safe harbor provided for forward-looking statements ... does not apply to any of the ... statements [made by Defendants since] many of the[se] ... statements ... were not identified as “forward-looking statements” when made. [Moreover,] to the extent there were any forward-looking statements, there were no meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the purportedly forward-looking statements. Alternatively, ..., [Defendants are liable for [their], false forward-looking statements because[,] at the time [these] statements [were] made, the ... speakers] knew that [their] forward-looking statements were] false ....

Id. ¶ 96.

2. Defendants’ Position

Defendants maintain that Plaintiffs’ claims should be dismissed on various grounds. See, generally, Dismissal Mot., Dismissal Reply. First, addressing Plaintiffs’ claims related to Defendants’ forward-looking statements, Defendants point out that these forward-looking statements were: (a) accompanied by sufficient cautionary language, which immunizes the speaker from liability regardless of the speaker’s state of mind, see Dismissal Mot., at 14-20; Dismissal Reply, at 4-9; and (b) in any event, the statements at issue were made by Defendants without the requisite state of mind. See Dismissal Mot., at 20-34; Dismissal Reply, at 9-18. In addition, Defendants argue that Plaintiffs’ other group of claims — namely, the group of claims asserting that Defendants’ statements were misleadingly incomplete — should also be dismissed on the grounds of: (a) being insufficiently pled; and (b) allegedly existing Synchronoss’ NDAs with Apple/AT & T that, Defendants believe, legally prevented Synchronoss from disclosure of certain information. See Dismissal Mot., at 34-43; Dismissal Reply, at 18-28. Finally, Defendants point out that Plaintiffs “failfed] to allege that any other statement made by Defendants was false, let alone knowingly false.” See Dismissal Mot., at 43-45; Dismissal Reply, at 28-29. In light of the foregoing, Defendants conclude Synchronoss committed no violations of Section 10(b) and/or Rule 10b-5 and, consequently, Waldis and/or Inving’s have no personal liability under Section 20(a). See Dismissal Mot., at 45; Dismissal Reply, at 29.

Defendants’ submissions arrived accompanied by numerous exhibits and appendices, replicating a multitude of Synchronoss’ filings made with the Securities and Exchange Commission (“SEC”), transcripts of those Synchronoss’ earnings calls, excerpts which were pled in the Complaint, and various newspaper articles and reports of financial analysts (arriving to conclusions qualitatively different from, if not outright opposite to, the conclusions asserted in the Complaint as opinions of “journalists, analysts and investors”). See, generally, Docket Entries Nos. 24 and 30. However, Defendants’ alleged NDAs with Apple/AT & T were neither included in these appendices nor sought to be filed, even under seal. See, generally, id. It appears that Defendants’ reliance on these allegedly existing but thus-far undisclosed NDAs was the reason for Plaintiffs’ Strike Motion.

B. Strike Motion

Specifically, on June 5, 2009, Plaintiffs filed — -jointly with their Opposition to Defendants’ Dismissal Motion — Plaintiffs’ Strike Motion requesting the Court to strike Defendants’ arguments based on these NDAs. See Docket Entry No. 27. That filing caused Defendants to submit— together with their Reply to Plaintiffs’ Dismissal Opposition — Defendants’ Strike Opposition, see Docket Entry No. 31, which— in turn — caused the filing of Plaintiffs’ Strike Reply. See Docket Entry No. 32.

In a nutshell, Plaintiffs moving and reply points can be summarized as follows:

1. Defendants’ Dismissal Opposition frequently asserts, as either an established — or, at the very least, as a pled fact — that Defendants were prevented from disclosing certain statistical information about iPhone sales (as well as about Synchronoss’ future plans) by these thus-far undisclosed NDAs, see Strike Mot., at 1;

2. However, the legal binds ensuing from these NDAs cannot be judicially noticed since the content of these NDAs was never disclosed publically (or even to Plaintiff only, e.g., by filing under seal), see id. at 2, 5; and even if Defendants’ Dismissal Motion is converted into a motion for summary judgment, Plaintiffs would still be entitled to discovery with respect to these NDAs, see id. at 2-3, 5-6; and

3. Since the content of these NDAs is neither an integral part of Plaintiffs’ factual assertions nor subject to judicial notice, nor is it amenable to a summary ruling prior to Plaintiffs’ completion of relevant discovery, Defendants’ arguments suggesting that Defendants could not be liable for failure to make certain disclosures because of these NDAs should be stricken from Defendants’ Rule 12(b) Motion to Dismiss. See id. at 2-4, 6; accord Strike Opp.

Defendants, in response, maintain that Plaintiffs’ Strike Motion is without merit for the "following reasons:

1. Instead of requesting the Court to strike any particular exhibit attached to or relied upon by Defendants, Plaintiffs move this Court to strike Defendants’ argument, i.e., to strike nothing but “words”, see Strike Opp., at 1;

2. Defendants believe that this Court should accept Defendants’ factual assertion as true because the pleading requirements prevent the Court from considering Plaintiffs’ self-serving conclusory allegations, see id. at 3-6, 10-12;

3. Defendants’ arguments based on the NDAs are warranted because Plaintiffs used certain language in their Complaint that included references to these NDAs, specifically, when Plaintiffs made the following allegations:

[O]n October 25, 2007, ... Waldis ..., when asked about the gap between iPhones sold and activated, ... stated that he was prevented from sharing specifics “due to NDA obligations” .... [Also, during] the May 6, 2008 call, ... Waldis stated: ... “[W]e cannot share the specifics due to NDA obligations.... We’re not allowed to discuss any of the details [relevant to] the NDA....” [In addition, Irving stated during that call:] “I’ve tried to provide as much information as I could without violating any NDAs that we have with our customer” ...

Strike Opp., at 6-7 (quoting Compl. ¶¶ 37, 65-67);

4. Defendants believe that the Court can take judicial notice of — apparently — both the existence of these NDAs and the scope/application of these NDAs (seemingly, as the scope/application of these NDAs is defined by Defendants) simply because: (a) as a general matter, “courts can [take] judicial notice of information that was publicly available to reasonable investors”; and (b) Defendants repeatedly and publieally made references to their alleged NDAs when Defendants made public statements; Strike Opp., at 9-10; and

5. Plaintiffs’ request for conversion of the Dismissal Motion into a motion for summary judgment (with ensuing Plaintiffs’ discovery rights) is without merit.

See id. at 12-15.

IV. DISCUSSION

A. Strike Motion

The Court will address the parties’ contentions in conjunction with discussion of the pertinent Rules of Evidence and Rules of Civil Procedure.

1. Evidentiary Aspects

Both at common law and under the Federal Rules, most proof is presented by means of testimonial evidence or by the offering documentary evidence.

But there is an exception to the requirement that a party who relies on a certain proposition must prove it; judicial notice. Rule 201 of the Federal Rules of Evidence governs judicial notice, providing that facts noticed may not be subject to reasonable dispute and specifying certain procedural requirements that must be followed.

Rule 201(b) ... permits a district court to take judicial notice of facts that are “not subject to reasonable dispute in that [they are] either[:] (1) generally known within the territorial jurisdiction of the trial court[;] or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Rule 201(b).

In re NAHC, Inc. Sec. Litig., 306 F.3d 1314, 1331 (3d Cir.2002) (finding that judicial notice could be properly taken with respect to “three different categories of documents [which] included: (1) documents relied upon in the Complaint ([including the defendant’s] press releases); (2) documents filed [by the defendant] with the SEC; and (3) stock price data compiled by [a reliable financial] news service”) (emphasis supplied); accord Jackson v. Broad. Music, Inc., 2006 WL 250524, at *7, 2006 U.S. Dist. LEXIS 3960, at *18 (S.D.N.Y. Jan. 31, 2006) (“the court may take judicial notice of public records and of ‘admissions in pleadings and other documents in the public record filed by a party in other judicial proceedings that contradict the party’s factual assertions in a subsequent action’ without converting the motion into one for summary judgment”) (emphasis supplied, quoting Harris v. New York State Dep’t of Health, 202 F.Supp.2d 143, 173 (S.D.N.Y.2002), and citing Munno v. Town of Orangetown, 391 F.Supp.2d 263, 268 (S.D.N.Y.2005)).

Conversely, judicial notice is improper if a legitimate question exists as to the underlying source of the information. See Hinton v. Dep’t of Justice, 844 F.2d 126 (3d Cir.1988); see also Oneida Indian Nation of New York v. State of N.Y., 691 F.2d 1070 (2d Cir.1982). Thus, while matters of which judicial notice may be taken include facts capable of immediate and certain verification by resort to sources whose accuracy is beyond dispute, accord Dashiell v. Meeks, 396 Md. 149, 174-75, 913 A.2d 10 (2006), accurate records or other sources of a judicially-noticed fact must necessarily exist and be known to the court to enable even the very consideration of whether the fact is amenable to judicial notice. Of. State v. Green, 890 So.2d 1283 (Fla.Dist.Ct.App.2d Dist.2005). The rationale of this proposition appears self-evident: the principle of judicial notice obligates the court to — at the very least— identify the source with absolute certainty; otherwise, the ability of a party to dispute this source is frustrated, and an appellate court cannot meaningfully review the lower court’s decision to resort to a source whose accuracy (or even very existence) cannot reasonably be established. See United States v. Boyd 289 F.3d 1254 (10th Cir.2002) (“we are mindful that if a court takes judicial notice of a fact whose application is in dispute, the court removes the weapons of rebuttal evidence, cross-examination and argument from the parties and raises doubt as to whether the parties received a fair hearing. The effect of taking judicial notice is to preclude a party from introducing contrary evidence and, in effect, directing a verdict against him as to the fact noticed”); see also State v. Gagnon, 155 N.H. 418, 924 A.2d 384 (2007).

Hence, while the statements made by Synchronoss in its filings made with the SEC are properly subject to judicial notice, the opinions of analysts or reporters cannot be noticed for the truth of the matter stated therein: only the fact that these opinions were published can be noticed. By the same token, while the statements contained in the Complaint (indicating that Waldis and Irving issued certain written statements and made certain oral utterances) are amenable to judicial notice, Defendants’ claims (that their NDAs exist and that the terms of these NDAs both relate to Synchronoss’ statements and prevented Defendants from making certain disclosure) cannot be judicially noticed: this is so simply because neither the existence of these NDAs nor their content is verified by the record or admitted by Plaintiffs. Indeed, it would be wholly anomalous for the Court to conclude that Defendants were actually subject to certain legal bonds if the Court has nether any information about the content of these bonds nor can the Court even establish that these bonds existed in actuality. See, e.g., Hardy v. Johns-Manville Sales Corp., 681 F.2d 334, 347 (5th Cir.1982) (“judicial notice applies [only] to self-evident truths that no reasonable person could question, truisms that approach platitudes or banalities”). Simply put, Defendants’ verbal claims about these NDAs are qualitatively different from actually existing and introduced into the record NDAs. And, since the fact that a litigant uttered certain audible sounds or put certain words in writing cannot render the truthfulness of the content of these utterances/writings amenable to judicial notice, Defendant’s substantive position as to Plaintiffs’ Strike Motion is without merit.

2. Procedural Aspects

The Federal Rules of Civil Procedure permit an early challenge to the legal sufficiency of the allegations of a claim under both Rule 12(b)(6) and (c). When a defendant successfully challenges the plaintiffs legal entitlement to the relief demanded, even if all well-pleaded facts are taken in the light most favorable to the plaintiff, Rule 12(b)(6) permits a judgment as a matter of law in favor of the defendant. As one court put it, “[l]ike a battlefield surgeon sorting the hopeful from the hopeless, a motion to dismiss invokes a form of legal triage, a paring of viable claims from those doomed by law.” Iacampo v. Hasbro, Inc., 929 F.Supp. 562, 567 (D.R.I.1996). If any legal requirement of the claim is not plead, the motion should be granted. See Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984); see also Advanced Cardiovascular Sys., Inc. v. Scimed Life Sys., 988 F.2d 1157, 1160 (Fed.Cir.1993) (“The purpose of [Rule 12(b) ] is to allow the court to eliminate actions that are fatally flawed in their legal premises and destined to fail, and thus spare litigants the burdens of unnecessary pretrial and trial activity”). For example, if a plaintiff seeks to recover on a tort theory but fails to allege that the defendant’s actions were the cause of harm, a Rule 12(b)(6) motion is appropriate.

Of greater importance as a true summary adjudication method is a Rule 12(b)(6) motion which challenges the plaintiffs entitlement to relief upon the legal theory pleaded. For example, a plaintiff seeking recovery under a theory of negligent infliction of emotional distress under circumstances in which the governing law would not recognize the cause of action— under the facts as they are pled — may suffer judgment as a matter of law because recovery simply cannot be had as alleged.

Rule 12(c) similarly permits an adjudication based purely on the allegations of the pleadings, be these pleadings either the complaint or the answer. Indeed, this motion is particularly useful when the answer admits the allegations of the complaint, for example that a debt is owed as claimed, but raises a defense that is insufficient in law. See, e.g., St. Mary’s Honor Ctr. v. Hicks, 509 U.S. 502, 521-22, 113 S.Ct. 2742, 125 L.Ed.2d 407 (1993) (“A defendant whose answer fails to contest critical averments in the complaint will, on motion, suffer a judgment on the pleadings”).

Hence, both Rule 12(b) and Rule 12(c) motions are “summary 'proceedings” on the merits in the sense that they deal directly with the existence of a meritorious claim or defense. See Labaton and Stern-berg, Using and Protecting Against Rule 12(b)(6) and Rule 9(b) Motions, 4 Practical Litig. 79 (1993); Hamabe, Functions of Rule 12(b)(6) in the Federal Rules of Civil Procedure: A Categorization Approach, 15 Campbell L.Rev. 119 (1993). That is why the Court of Appeals stated that, “[ujnder Rule 12(c), judgment will not be granted unless the movant clearly establishes that no material issue of fact remains to be resolved and that he is entitled to judgment as a matter of law.” Bayer Chems. Corp. v. Albermarle Corp., 171 Fed.Appx. 392, 397 (3d Cir.2006).

Here, Defendants’ NDAs-related assertions introduced in the Dismissal Motion (i.e., assertions that Defendants’ refusal to disclose certain information was proper because of the existence, content and application of the alleged NDAs) are, effectively, assertions of the type that could only be included, as a defense, in Defendants’ answer rather than in their Rule 12(b) motion. Hence, it is hardly surprising that— being presented with Defendants’ quasi-answer statements meshed into Defendants’ Dismissal Motion- — Plaintiffs mounted a quasi-Rule 12(c) challenge, although they labeled their application “Motion to Strike.” In light of the foregoing, it appears self-evident that, at the instant juncture, Plaintiffs’ Strike Motion should be dismissed as premature. If this matter proceeds past Rule 12(b) dismissal stage, and Defendants’ answer raises the alleged NDAs as a defense, then Plaintiffs can renew them motion under Rule 12(c), or either side can seek a full or partial summary judgment on the grounds of these NDAs, that is, provided that neither the existence nor the scope/application of these NDAs is in dispute.

B. Dismissal Motion

1. Pleading Requirements

The standard of review under Rule 12(b)(6) is well-settled: the question is whether the plaintiff should be given an opportunity to offer evidence in support of plaintiffs claims, not whether the plaintiff will ultimately prevail in a trial on the merits. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974), overruled on other grounds, Harlow v. Fitzgerald, 457 U.S. 800, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982); Allegheny Gen. Hosp. v. Philip Morris, Inc., 228 F.3d 429, 434-35 (3d Cir.2000). However, qualitatively different pleading requirements apply to those assertions that are subject to Rule 8 and to those that are examined under Rule 9.

a. Rule 8 Pleadings

It is long established that a court should “accept as true all of the [factual] allegations in the complaint and reasonable inferences that can be drawn therefrom, and view them in the light most favorable to the plaintiff.” Morse v. Lower Merion School Dist., 132 F.3d 902, 906 (3d Cir.1997). Nonetheless, the Third Circuit has noted that courts are not required to credit bald assertions or legal conclusions improperly alleged in the complaint. See Burlington Coat Fact. Sec. Litig., 114 F.3d 1410, 1429 (3d Cir.1997). Therefore, legal conclusions draped in the guise of factual allegations may not benefit from the presumption of truthfulness. See Nice Sys., Ltd. Sec. Litig., 135 F.Supp.2d 551, 565 (D.N.J.2001).

Last year, addressing the clarifications as to the litigant’s pleading requirement stated by the United States Supreme Court in Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), the Court of Appeals for the Third Circuit provided the district courts with guidance as to what pleadings are sufficient to pass muster under Rule 8. See Phillips v. County of Allegheny, 515 F.3d 224, 230-34 (3d Cir.2008). Specifically, the Court of Appeals observed as follows:

“While a complaint ... does not need detailed factual allegations, a plaintiffs obligation [is] to provide the ‘grounds’ of his ‘entitlefment] to relief____” Twombly, 127 S.Ct. at 1964-65 ... “[T]he threshold requirement of Rule 8(a)(2) [is] that the ‘plain statement [must] possess enough heft to ‘sho[w] that the pleader is entitled to relief.’ ” Id. at 1966. [Hence] “factual allegations must be enough to raise a right to relief above the speculative level.” Id. at 1965 & n. 3

Id. at 230-34 (original brackets removed). This pleading standard was further refined by the United States Supreme Court in its recent decision Ashcroft v. Iqbal, — U.S. -, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009):

[In any civil action, t]he pleading standard ... demands more than an unadorned [“]the-defendant-unlawfully-harmed-me[”] accusation. [Twombly, 550 U.S.] at 555, 127 S.Ct. 1955.... A pleading that offers “labels and conclusions” or “a formulaic recitation of the elements of a cause of action will not do.” [Id.] at 555, 127 S.Ct. 1955. [Moreover,] the plausibility standard ... asks for more than a sheer possibility that a defendant has acted unlawfully. Id. [Indeed, even w]here a complaint pleads facts that are “merely consistent with” a defendant’s liability, [the so-alleging complaint still] “stops short of [showing] plausibility of ‘entitlement to relief.’” Id. at 557, 127 S.Ct. 1955 (brackets omitted). [A fortiori] the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions [or to t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements[, ie., by] legal conclusion^] couched as a factual allegation [e.g.,] the plaintiffs’ assertion of an unlawful agreement [or] that [defendants] adopted a policy “ ‘because of,’ not merely ‘in spite of,’ its adverse effects upon an identifiable group.”____ [W]e do not reject these bald allegations on the ground that they are unrealistic or nonsensical. ... It is the conclusory nature of [these] allegations ... that disentitles them to the presumption of truth.... [Finally,] the question [of sufficiency of] pleadings does not turn [on] the discovery process. Twombly, 550 U.S.] at 559, 127 S.Ct. 1955 .... [The plaintiff] is not entitled to discovery [where the complaint alleges any of the elements] “generally,” [ie., as] a conclusory allegation [since] Rule 8 does not [allow] pleading the bare elements of [the] cause of aetion [and] affixfing] the label “general allegation” [in hope of developing facts through discovery],

Iqbal, 129 S.Ct. at 1949-54.

The Third Circuit observed that Iqbal provided the “final nail-in-the-coffin” for the “no set of facts” standard set forth in Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957), which was applied to federal complaints before Twombly. See Fowler v. UPMC Shadyside, 578 F.3d 203 (3d Cir.2009). Since Iqbal, the Third Circuit has required the district courts to conduct, with regard to Rule 8 allegations, a two-part analysis when presented with a motion to dismiss:

First, the factual and legal elements of a claim should be separated. The District Court must accept all of the complaint’s well-pleaded facts as true, but may disregard any legal conclusions. [See Iqbal, 129 S.Ct. at 1949-50]. Second, a District Court must then determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a “plausible claim for relief’ [in light of the definition of “plausibility” provided in Iqbal] In other words, a complaint must do more than allege the plaintiffs entitlement to relief. A complaint has to “show” such an entitlement with its facts. See Phillips, 515 F.3d at 234-35. As the Supreme Court instructed in Iqbal “[w]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]’-‘that the pleader is entitled to relief.’” Iqbal, [129 S.Ct. at 1949-50 (emphasis supplied) ]. This “plausibility” determination will be “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id.

Fowler, 578 F.3d at 210-11 (emphasis supplied).

b Pleading Under Rule 9 and the Reform Act

In comparison to Rule 9, Rule 8— even as interpreted in Iqbal and clarified in Fowler — still sets forth merely the floor pleading standard, simply because the very language of Rule 9 imposes a heightened pleading requirement by demanding factual particularity with respect to allegations of fraud. “This particularity requirement has been rigorously applied in securities fraud cases.” Burlington, 114 F.3d at 1417 (citations omitted). Consequently, a plaintiff averring securities fraud claims must specify “ ‘the who, what, when, where, and how: the first paragraph of any newspaper story.’ ” Advanta Corp. Sec. Litig., 180 F.3d 525, 534 (3d Cir.1999) (quoting DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir.1990)).

The Third Circuit clarified:

[although Rule 9(b) falls short of requiring every material detail of the fraud such as date, location, and time, plaintiffs must use “alternative means of injecting precision and some measure of substantiation into their allegations of fraud.”

Rockefeller Ctr. Props. Sec. Litig., 311 F.3d 198, 216 (3d Cir.2002) (quoting Nice Sys., 135 F.Supp.2d at 577).

In addition to the Rule 9(b) requirements, a plaintiff alleging securities fraud must comply with the heightened pleading requirements of the Reform Act